Tussle for insurance agents, financial advisers intensifying

THE simmering war for experienced insurance agents or financial advisers in Singapore could boil over, following mass resignations at Prudential Singapore's agency force.

It is acknowledged in the industry that it is a costly business for an agency or financial advisory (FA) firm to poach agents - especially the star performers - from rival firms; only the most deep-pocketed can do so.

However, the resignation of about 200 out of the more than 400 agents from Peter Tan Organisation (PTO), one of Prudential's largest group of agency units, has put a significant number of agents out on the job market - opening the way for smaller insurers and FA firms to enter the bidding fray for talent as well.

The Business Times reported on Monday that a number of these agents and advisers are expected to join Aviva Singapore's new FA firm, although the situation is fluid, given that there are other eyes on this pool of agents, say market sources.

The PTO saga aside, there have been aggressive buyouts and significant movements between financial institutions (FIs) by agents and advisers - and the Monetary Authority of Singapore (MAS) is uncomfortable about this level of churn.

Its priority is to ensure that consumers' interests are protected, and it is concerned that policy switching might occur.

In policy switching, consumers are persuaded by migrating agents to surrender their policies - perhaps incurring losses - and then to use the proceeds to buy new plans with these agents' new employers.

The MAS said it has been alerted to the impending movement of agents from Prudential to Aviva FA, and is keeping close tabs on the situation.

"MAS does not intervene in commercial hiring decisions, but seeks to ensure that FIs have appropriate measures and controls in place to ensure that customers' interests are protected, notwithstanding movements of representatives between FIs.

"FIs must also comply with MAS's market-conduct rules to safeguard customers' interests."

Besides improper switching of policies, large-scale migration of representatives could heighten risks of pressure-selling by poached agents to fulfil conditions of their buyouts, the regulator noted.

MAS added that it requires FIs involved to uphold their hiring standards. Post-recruitment, FIs are expected to monitor their new hires for signs of improper switching or other undesirable sales practices. The regulator cautioned that it would not hesitate to take regulatory action against FIs who allow such practices at the expense of their customers' interests.

In an industry where agents and advisers' earnings are based entirely on commissions, insurers - particularly those which cannot match what the market offers - have a tough time fending off rival firms looking to poach their best performers.

Earlier this year, NTUC Income, which relies mainly on the FA channel and partly on its small, salaried sales team, recruited more than 30 AIA Singapore agents to set up its agency force, sources said.

A year ago, BT reported that Manulife Financial Advisers (MFA), in which Canadian insurer Manulife has a majority stake, bought out fewer than 10 agents from AIA, choosing instead to take in more agents from French insurer Axa Life, Swiss-based Zurich Life and FA firm PIAS, which is Aviva-owned. BT understands that MFA has since recruited more than 20 agents from AIA's pool of more than 4,000.

As an indication of how aggressive the courting can be, MFA has continued to aggressively woo other agents with pay packages of up to 180 per cent of past annual income - exceeding the 150 per cent ceiling recommended under the Life Insurance Association Singapore (LIA Singapore) and agreed to by its members.

"In accordance with this industry guideline, we strongly advocate that packages offered to advisers be commensurate with each individual's qualifications, track record and experience. It should not include a lump sum that is over and above the loss of renewal income."

She added that AIA urges "all in the industry to adopt responsible recruitment strategies".

French insurer Axa Life is even more aggressive, it would seem. It is looking to hire experienced advisers through what BT has been told is its routine recruitment drive, with its buyout offers going as high as 250 per cent of past annual income for top performers.

"We do not condone any action which may lead to twisting and churning of business, and adversely damage the reputation and public perception of our industry," she said. It is "imperative" that members follow good recruitment practices, she added.

This article was first published on July 10, 2016. Get The Business Times for more stories.